Corporate Governance: Creating Value for Stakeholders

✍ Scribed by Shital Jhunjhunwala

• Publisher: Palgrave Macmillan
• Year: 2023
• Tongue: English
• Leaves: 286
• Category: Library

✦ Synopsis

The book covers the broad area of Corporate Governance (CG) and its constituents. It includes new and contemporary topics such as CG in family-controlled businesses, governance of multinational corporations, related party transactions and impact investing.

It is a blend of theory and practice, and presents cases old and new, from Maxwell to Tata Sons, from both the western and eastern hemisphere to facilitate the understanding of CG issues. The book brings together governance frameworks of different countries in one place. For instance, when ‘appointment of auditors’ is discussed the UK code, US laws, EU Audit legislation 2016 and Indian rules are covered. It includes latest and novel regulations such as CSR in India.

✦ Table of Contents

Acknowledgements
Disclaimer
Contents
List of Figures
List of Tables
1 Corporate Governance: An Introduction
What Is Corporate Governance?
The Birth of Corporate Governance
The How: Models of Corporate Governance
Anglo-Saxon or One-Tier Model
Continental European (German) or Two-Tier Model
Hybrid (Japanese Business Network) Model
Communist (Chinese) Model
The Indian Model
Why Corporate Governance
Principles of Corporate Governance
References
2 Boards and Directors
Board of Directors
Board Composition
Executive Directors: The Dual Role
Non-Executive Directors
Inside Directors
Nominee Directors
Outside Directors
Independent Directors
Board Independence
“Independent Director” an Oxymoron
Board Leadership
CEO-Chairman Duality
Independent Chair
Board Committees
Selecting a Director: The Nomination Committee
Directors’ Remuneration
Remuneration Committee
References
3 Theoretical Perspectives of Corporate Governance
Theories and Development of Corporate Governance
Property Right Theory: Ownership and Control
Concentrated or Dispersed Ownership
Differential Voting Rights
Control
Managerial Control
Working Control
Majority Control
Conflict Theory of Corporate Governance
Principal-Agent Conflict: The Agency Theory
Agency Problem
Agency Cost
Principal-Principal Conflict
Agent-Agent Conflict
Managerial Hegemony Theory
Principal Cost Theory
Principal Costs
Agent Costs
Transaction Cost Economics
Theories of Harmonic Contract
Stewardship Theory
Resource Dependency Theory
Institutional Theories of Corporate Governance
Shareholder Primacy: Internal Pressure
Stakeholder Theory: External Pressure
National Systems Governance (NSG) Theory: Isomorphic Pressure
References
4 Internal Control, Financial Oversight and Risk Management
Financial Oversight
Internal Control
IT Governance
Financial Controls
Reliability of Financial Statements
Audit and Auditors
Audit Committee
Composition
Role of Audit Committee
Risk Management
Data Protection
References
5 Global Corporate Governance Movement
The First Scams—UK Shaken, WakesUp
Cadbury Report
Board Effectiveness
Board Committees
Auditors
Shareholders
Disclosure and Transparency
UK Corporate Governance Code
Greenbury Report
Combined Code
Turnbull Report
The Higgs Report
The Smith Report
The Scandals of USA
Sarbanes-Oxley Act (SOX)
Public Company Accounting Oversight Board (Title I)
Auditors Independence (Title II)
Corporate Responsibility (Title III)
Financial Disclosures (Title IV)
Analyst Conflicts of Interest (Title V)
Frauds and Penalties
The Reactive Regulator
Corporate Governance Initiatives in India
Background
Evolution of Corporate Governance in India
The Confederation of Indian Industries Code (1988)
Birla Committee (1999)
Clause 49 (2000)
Naresh Chandra Committee (2002)
Narayana Murthy Committee Report (2003)
Clause 49 (2004)
Irani Committee (2004)
Clause 49 (2014)
Companies Act 2013
Listing Obligations and Disclosure Requirements (2015)
Principles of Corporate Governance
Major Regulations
Board of Directors
Board Committees
Risk Management
Whistle-Blower Policy
Related Party Transactions
Subsidiary Companies
Independent Director
Responsibilities
Quarterly Report
Disclosures
The Movement Continues
References
6 Shareholder and Activism
Shareholders
Preference Shares
Equity Shares
Participation in Annual General Meeting (AGM)
Information of Meeting
Agenda of Meeting
Voting Rights
Alternate Voting Mechanisms
Adding an Agenda
Conveying a Meeting
Right to Information
Shareholder Activism
Exit Strategy
Threat of Exit
Voice
Institutional Activism
Proxy Advisory Firms Abetting Activism
References
7 Corporate Social Responsibility
The Stakeholder Approach
Corporate Social Responsibility
Elements
Principles
Process of Responsiveness
Corporate Social Performance
CSR Crusade
Corporate Charity—The Philanthropic Approach
CSR—Value Creation Approach
CSR—Strategic Approach
Framework for Integrating CSR into Business
Mandating CSR in India—The Push
CSR and Crisis
References
8 Sustainable Development for Corporate Sustainability
Corporations and Sustainable Development
Sustainability Reporting
The Communication on Progress (COP)
Triple Bottom Line
Global Reporting Initiative (GRI)
ESG Reporting
Business Responsibility and Sustainability Reporting
Integrated Reporting
Capitals
Content Elements
Guiding Principles
The Investment Goal
Responsible Investment
Socially Responsible Investing
Impact Investment
References
9 Managing Conflict—Measures and Mechanism
Governance Mechanisms to Manage Conflict
Insider Trading
Prohibition of Insider Trading
Whistle-Blowing
Whistle-Blower Policy
Benefits of Whistle-Blower Policy
Legal Framework
Code of Ethics
Related Party Transactions
Monitoring Related Party Transactions
Conflict of Interest
References
10 Building Dynamic Boards
Creating Value-Adding Boards
Board Diversity
Rationale for Board Diversity
Constraints of Board Diversity
Making Diversity Work
Board Selection
Board Evaluation
CEO Oversight
References
11 Corporate Governance in Family Businesses
Family Business
Governance Through Stages of Growth
First Generation
Second Generation
Third Generation
Fourth Generation
The Family Edge
Governance Intricacies of Family-Run Businesses
Family Dynamics
Family vs. Company
Unwillingness to Relinquish Control
Insider vs. Outsider
Inadequate Succession Planning
Independent Directors’ Dilemma
Inactive Non-Promoter Shareholders
Board Processes
Making It Work - The Family Enterprise
Family Bond: Family Value and Mutual Trust
Ownership
Well-Defined Roles
Professional Management
Strategic Boards
Succession Planning
Wealth Management
Governance Framework
References
12 Corporate Governance—Beyond Borders
Multinational Companies
Corporate Group
Holding or Parent Company
Subsidiary
Associate Company
Legal Position
Reasons for Forming Corporate Groups
Governance of Corporate Group
Corporate Governance in Multinationals
Governance Strategy
Governance Model
Ritual Board
Advisory Board
Bifurcated Board
Local Board
Governance Concerns of Corporate Groups
Monitoring of Subsidiary Companies
Board
Consolidated Financial Statements
Audit and Audit Committee
Material Subsidiary
MNCs: Catalyst for Robust Corporate Governance
References
Index